Yangzijiang Shipbuilding says its wholly-owned subsidiaries, Jiangsu Tianchen Marine Import & Export Co., Ltd., Jiangsu Yangzi Xinfu Shipbuilding Co., Ltd. and Jiangsu New Yangzi Shipbuilding Co., Ltd., have a “reasonably good prospect of success” in the arbitrations levelled against them.
According to Yangzijiang Shipbuilding’s Oct 12 announcement, arbitration proceedings were commenced at an arbitration tribunal in London by certain unnamed entities on June 10, 2022, and on Sept 26, 2022, against three of the group’s wholly-owned subsidiaries.
The claims are for 10 shipbuilding contracts valued at US$900 million and entered into between the group’s subsidiaries and the unnamed entities. Four of the vessels were purchased on Nov 5, 2021, while six vessels were purchased on Dec 30, 2021. The contracts were terminated by the claimants on March 24, 2022, and May 16, 2022, respectively.
Notices for the commencement of the arbitration proceeds were served for the four vessels on June 10, 2022, while similar notices were issued for the remaining six vessels on Sept 26, 2022.
Yangzijiang’s announcement noted that the claimants were seeking US$835 million, which comprises the loss of bargain, loss of profits and refund of the payments made by the claimants. The group adds that the claimants paid only US$3.32 million for the 10 contracts.
After “substantive progress” in the arbitrations, which took place this year, Yangzijiang says it continues to have “good arguable defences” and a “good arguable case that the claims should be denied”. The amount requested by the claimants is also “incorrectly measured” and “highly inflated”.
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The first tranche of the arbitrations is scheduled for November this year. Yangzijiang adds that the claims are not expected to materially impact its financial position for the FY2024 ending Dec 31.
Shares in Yangzijiang Shipbuilding closed 2 cents higher or 0.81% up at $2.50 on Oct 11.
